China's government bond futures close higher, 30-year futures up 0.31%
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China's bond market showed a firming trend on Thursday (September 24), with treasury bond futures closing higher across the board. The 30-year futures contract rose 0.31% to 117.37, while the 10-year contract gained 0.03% to 109.59. Yields on major government bonds moved narrowly, with the 30-year ultra-long special government bond yield falling 0.25 basis points to 2.1175%. The People's Bank of China conducted 51.5 billion yuan in 7-day reverse repos at a 1.40% rate, resulting in a net withdrawal of 110.5 billion yuan from the financial system as 162 billion yuan in repos matured. Short-term interbank rates edged up, with the overnight Shibor rising 0.27 basis points to 1.364%. Overseas, U.S. Treasury yields rose sharply, with the 10-year yield up 15.08 basis points to 5.112%. Citic Securities attributed the U.S. yield rise to the invalidation of IEEPA tariffs and large tax refunds, forecasting higher fiscal deficits and rising debt pressure. Huatai Securities noted three main trading themes: Fed rate hikes, geopolitical tensions and oil prices, and AI industry narratives, predicting a low probability of a Fed rate hike in October but a possible move in December.
Source report
Beijing, September 24 (Xinhua Finance) — China's bond market showed a firming trend on Thursday (September 24), with treasury bond futures closing broadly higher. Yields on interbank bonds fluctuated within a narrow range, with China Development Bank (CDB) bonds slightly outperforming government bonds. The central bank conducted a net withdrawal of 110.5 billion yuan from the open market, while short-end funding rates edged up as the month-end approached.
Institutions suggest that the bond market has turned optimistic ahead of the holiday period. With funding rates closely anchored to policy rates, ultra-long-term bonds remain the preferred instrument for bullish positioning.
Market Performance
Treasury Futures closed higher across the board:
- 30-year contract: +0.31% to 117.37
- 10-year contract: +0.03% to 109.59
- 5-year contract: +0.03% to 106.565
- 2-year contract: +0.01% to 102.594
Interbank Yields mostly declined:
- 30-year government bond ("26 Ultra-long Special Government Bond 04"): -0.25 bps to 2.1175%
- 10-year CDB bond ("26 CDB 05"): -0.1 bps to 1.7545%
- 10-year government bond ("26 T-bond 16"): +0.05 bps to 1.6715%
Convertible Bond Index closed down 1.34% at 471.83, with a turnover of 42.107 billion yuan. Notable movers included:
- Top decliners: Shenglan Convertible Bond 02 (-9.48%), Yinlun Convertible Bond (-9.33%), Jintian Convertible Bond (-7.75%), Sifang Convertible Bond (-7.14%), Jincheng Convertible Bond (-6.30%)
- Top gainers: Hongtu Convertible Bond (+7.33%), Xianghe Convertible Bond (+6.77%), Fuxin Convertible Bond (+3.02%), Shanlu Convertible Bond (+2.32%), Taifu Convertible Bond (+0.97%)
Overseas Bond Markets
North America (as of September 23 local time): U.S. Treasury yields rose across the board:
- 2-year: +13.55 bps to 4.889%
- 3-year: +15.28 bps to 4.969%
- 5-year: +16.1 bps to 4.996%
- 10-year: +15.08 bps to 5.112%
- 30-year: +9.5 bps to 5.397%
Asia: Japanese government bond yields mostly recovered:
- 5-year: +9.6 bps to 2.373%
- 10-year: +6 bps to 3.08%
- 20-year: +8.8 bps to 3.91%
Eurozone (as of September 23 local time):
- France 10-year: +15.4 bps to 4.655%
- Germany 10-year: +9.2 bps to 3.551%
- Italy 10-year: +14.7 bps to 4.501%
- Spain 10-year: +11.6 bps to 4.038%
- UK 10-year: +10.9 bps to 5.346%
Primary Market
CDB issued financial bonds with the following results:
- 3-year: yield 1.4334%, bid-to-cover ratio 2.6, marginal ratio 4.9
- 7-year: yield 1.6446%, bid-to-cover ratio 5.35, marginal ratio 19
- 10-year: yield 1.7616%, bid-to-cover ratio 5.76, marginal ratio 1.82
Liquidity and Open Market Operations
The People's Bank of China (PBOC) conducted 51.5 billion yuan in 7-day reverse repurchase agreements at a fixed rate of 1.40% via quantity-based bidding on September 24. The operation fully met the demand of primary dealers, with bids and allotments both at 51.5 billion yuan. With 162 billion yuan in reverse repos maturing on the same day, the net withdrawal stood at 110.5 billion yuan.
Shibor rates mostly rose for short-term tenors:
- Overnight: +0.27 bps to 1.364%
- 7-day: +1.6 bps to 1.4%
- 14-day: -1.2 bps to 1.418%
- 1-month: +0.07 bps to 1.426%
Institutional Views
CITIC Securities: Following the ruling that IEEPA tariffs are illegal, large-scale tax refunds have significantly narrowed U.S. tariff net revenue this year. The CBO estimates that, due to refunds, U.S. net tariff revenue in fiscal 2026 will be approximately $250 billion lower than its February forecast. The newly implemented Section 301 tariff exemptions are more extensive but are expected to only partially offset the revenue loss from the cancellation of IEEPA tariffs. Combined with rising mandatory spending and debt interest burdens, the U.S. faces elevated fiscal deficit pressure, with debt burdens expected to increase year by year.
Huatai Securities: Recent market activity has centered on three main trading themes: (1) Fed rate hikes and overseas long-term bond yields, (2) geopolitical tensions and oil price movements, and (3) shifts in the AI industry narrative. The probability of a Fed rate hike in October is low, with the next possible move in December. Under the dual pressures of inflation and midterm elections, Trump may push for a restart of U.S.-Iran negotiations, potentially easing geopolitical tensions. The AI narrative is shifting toward model development and demand validation, though the profitability of subsequent model iterations remains to be proven.
Editor: Wang Zhe
Source
新华财经Eastern
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